While basic travel policies often don’t cover pandemics, nor a fear of getting sick, many consumers that have had their claims denied for these reasons insist that there is a problem with complicated policy wording – an issue that has been in the spotlight before now too.
The problem is that, allegedly, many consumers believed that they were in fact covered in the event that they had to cancel their trips for lockdown-related reasons, including being advised to stay at home for their safety if they are over a certain age and having to cancel flights due to ski resort closures. Once again, the issue of inaccessible policy language has been raised.
In the US specifically, last month, Illinois Congressman Raja Krishnamoorthi raised concerns about denied claims, arguing that companies should not be profiteering from this crisis. “The evidence shows consumers are purchasing standard travel insurance products, thinking they will be covered if they cancel their trip because of coronavirus,” he said. “Yet, companies like Allianz, Travel Guard, and Generali are refusing to cover those claims.”
However, Allianz spokesperson Daniel Durazo responded, noting that the company’s insurance plans specifically exclude ‘losses resulting directly or indirectly from an epidemic’.
In truth, policy wording does seem to be a continued problem for the insurance industry – back in March 2019, US-based travel insurance provider Squaremouth launched a competition in which it offered a combined total of $30,000 to the first person to find hidden text within their policy documentation. Based on how people engage with their policies, the company was confident that it would be a long while before the prize was claimed – to its surprise, a winner was announced within 23 hours. Nonetheless, the concept fuelling this competition was based upon on the long-standing credence that policyholders rarely read their policies all the way through.
But what did that highlight? Basically, that insurance is a complicated product – the length of the policy documentation certainly supports this. But with the integration of chatbots and other digital solutions that make the customer journey more consumer-friendly, a gap has been highlighted for a more accessible approach to tailored and more transparent policies. It can be done, and successfully too. However, it also means that customers need to also realise that a more tailored insurance product offering them more cover will inevitably cost them a little more.
In terms of pandemic cover, going forward, Nick Masters, Senior Research Analyst with the market research firm IBISWorld, said travel insurers may attempt to ‘very loosely’ cover pandemics. He added, however: “[They will] likely limit their risk by placing limits on payouts.” Such policies, he reasoned, were likely to be ‘quite pricey’.